Making Wales wealthier
One of the reasons we advocate independence is because we believe it can be a way of kick-starting the Welsh economy and expanding the tax base, in order to improve the quality of life of people in Wales. At present, we’re forced to decide between cutting spending, or raising taxes.
YesCymru believes that independence will help change Wales’ economy so it can be in a position to fulfil its potential, become more vibrant, more diverse and more agile, and fit for the future challenges that Wales will face.
A familiar refrain is that Wales is ‘too small’ to be independent. However, if we look at the continent of Europe alone we see that there are a total of 18 independent nations with a smaller population than Wales! What these countries share, and what distinguishes them from Wales, is not their size, or the ability and talents of their people, but the fact that they are sovereign powers with control over all of the tools required to shape and develop their Economy.
We need only think of one of our nearest neighbours in this regard: the Republic of Ireland, with a GDP/head of €51,000, is doing so much better than Wales and Northern Ireland with a GPD/head of €22,000 and €23,000 (Eurostat, 2015).
Moreover, rather than proving a hindrance, being small can provide added opportunities. Adam Price and Ben Levigen’s essay The Flotilla Effect identified a number of advantages small nations have over larger nations when it comes to economics: they’re generally more open to trade; they tend to have greater social cohesion and improved democratic decision-making; and they find it easier to adapt to economic shocks.
Look, for instance, at how quickly the economies of the Republic of Ireland and Iceland have recovered since the financial crash of 2008. Both economies were hit hard by the Great Recession, and – like the UK, USA and much of Europe – went through a period of harsh austerity. But by 2014, the economy of the Republic of Ireland was growing at a rate faster than that of China and India, with unemployment and the government deficit being slashed. Iceland – a tiny nation of some 300,000 people – is doing even better, and its economy has now returned to its pre-2008 size.
When the Iron Curtain came down in the early 1990s, many nations smaller than Wales emerged from the old Eastern Bloc. They have proved to be nimble, effective, outward-looking players on the world stage. The Baltic States of Estonia, Latvia and Lithuania have proved particularly successful. Despite the parlous state of their economies when they came out of Communism, they have grown to be world leaders, out-performing many parts of Western Europe. What might Wales look like today if we’d won our independence in 1990? The Flotilla Effect considered this in detail, and concluded that had that happened, the Welsh economy would be 39 per cent larger than it is today.
Control over our economy
Of course, independence wouldn’t automatically make Wales wealthier. But what it would do is give the Welsh government a set of economic tools that it doesn’t have at the moment. Currently, the Welsh government has minimal powers over taxation and borrowing. The powers it does have are, however, hamstrung in ways that ensure England is not disadvantaged. For example, the UK Treasury has repeatedly refused Welsh Government calls to devolve Air Passenger Duty, unashamedly saying that doing so would give Cardiff Airport an advantage over Bristol Airport. For the most part, the British government simply hands Cardiff Bay an annual grant, which the Welsh Government uses to pay for Welsh services. This effectively means that Welsh economic policy is made in Westminster, and driven by the needs of the UK as a whole.
Independence would give Wales full control over economic policy. Not only would we be able to set our own level of taxes: we’d have control over how they’re collected. No more letting the super-rich dodge their taxes while ordinary people pay theirs. The tax code could be simplified, taking out many of the loopholes that multinational companies currently exploit. The UK tax code is currently 17,000 pages long, while Hong Kong’s is under 300 pages. Some countries, such as Norway, publish all tax returns, so that the system is totally transparent. None of these things are possible under devolution, but they’d all be on the table if Wales was independent.
Likewise, after independence, Wales would be responsible for regulating its own financial sector. When the banks went bust in 2008, the UK government decided to bail them out. While this had a massive impact on the economy, and on the lives of ordinary people, not a single banker was held to account for gambling with and losing our money. Compare this, again, with what has happened in Iceland. Their government decided to bail out ordinary people, writing off parts of mortgages and small-business loans that had been forced up by the crash. Twenty-six bankers, who had been gambling recklessly with their economy, were jailed. An independent Wales could set up its own system of regulation, designed to protect
everyone, not just the banks.
Indeed, an independent Wales would have the freedom to implement, very swiftly, many of those ideas that are recognized as essential to our prosperity, such as a development bank that could provide loans for those small and medium-sized businesses that are the lifeblood of our economy. The possibilities are endless, from infrastructure investment in broadband and transport, to the rapid development of large energy projects, and putting ourselves at the front of the queue in order to attract high-tech manufacturing industries. All these policies can be embedded within other aspects of development that we value as a country, such as respect for the environment, social justice, and ensuring prosperity and a decent quality of life across all parts of Wales.
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